If a new asset is being considered as a replacement for an old ...

[s.tung]

If a new asset is being considered as a replacement for an old asset, the relevant cash flows would be found by adding the operating cash flows from the old asset to the operating cash flows from the new asset.
 
  Indicate whether the statement is true or false

Question 2

A firm has issued 10 percent preferred stock, which sold for 100 per share par value. The cost of issuing and selling the stock was 2 per share. The firm's marginal tax rate is 40 percent. The cost of the preferred stock is ________.
 
  A) 3.9 percent
  B) 6.1 percent
  C) 9.8 percent
  D) 10.2 percent

[komodo7]

Answer to Question 1

FALSE

Answer to Question 2

D